A decision by Jaguar Land Rover (JLR) to invest in electric vehicle battery production in the UK is “very welcome”, a Labour MP has said.

Darren Jones, chair of the cross-party Business and Trade Committee, was responding to reports that Tata will establish a battery gigafactory in Somerset for its JLR operation, potentially creating thousands of jobs.

He added: “We will want to reflect, however, on the subsidy package that was required to secure this decision and if this approach is scalable to meet the need for further battery manufacturing sites for other car companies across the UK.”

Jonathan Reynolds MP, shadow business secretary, added that a Labour government would invest in eight gigafactories, with plans for the car industry to deliver “80,000 additional jobs”.

The gigafactory, which is expected to be announced on Wednesday, follows talks with the government on the level of financial support Tata would receive in return for the investment amid concerns that high UK energy prices could scupper a deal.

The Indian-based firm had reportedly been considering a site in Spain as an alternative.

The decision, if confirmed, marks a breakthrough in the race to secure domestic battery production ahead of 2030 when the UK is set to ban the sale of cars powered by petrol and diesel as part of the battle against climate change.

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The journey to date has been beset by many setbacks, including the collapse of the battery start-up Britishvolt early this year.

While Nissan is building a battery production facility in Sunderland, it has warned that the cost of electricity is continuing to pose a threat.

Other challenges include a lack of public charging infrastructure and high prices for electric vehicles currently versus their conventionally-powered counterparts.

The industry, across Europe, is also worried about 10% tariffs being applied – making electric vehicles even more expensive.

So-called rules of origin contained in the Brexit trading arrangements state that 45% of the value of an EV should originate in the EU or UK from 2024 to evade the charge.

There have been early talks between EU and UK officials on potentially extending the 2024 deadline to help both sides.

It is the battery element of a vehicle’s origin that is of greatest concern as production is currently dominated by Asia.

The UK is already home to the majority of JLR’s production and its research and development operations and the gigafactory will cement a gaping hole in its UK supply chain.

Colin Walker, head of transport at the Energy and Climate Intelligence Unit said of the deal: “The construction of this battery factory is vital if the UK’s car industry is to move with the times, continue to employ tens of thousands of people, and generate billions in export income.”

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